EXPLANATORY STATEMENT
STATUTORY RULES 1982 NO 43
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976 - AMENDMENTS OF THE SUPERANNUATION (INTEREST) REGULATIONS
LEGISLATIVE BASIS FOR THE REGULATIONS
The Superannuation Act 1976 (the Act) introduced, from 1 July 1976, a new contributory superannuation scheme for Commonwealth employees to replace the scheme provided under the Superannuation Act 1922. In accordance with section 45 of the Act, each member of the scheme is required to pay fortnightly BASIC contributions and, in accordance with section 48 of the Act, a member may elect to pay fortnightly SUPPLEMENTARY contributions. In accordance with section 53 of the Act, contributions are paid into the Superannuation Fund (the Fund).
Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters which the Act requires or permits to be prescribed or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Sub-section 3(1) of the Act defines “accumulated basic contributions” and “accumulated supplementary contributions”, in relation to a person who has ceased to be a contributor, as -
(a) an amount equal to the sum of the relevant contributions paid by the person and the amount of any interest that, in accordance with the regulations, is payable in respect of those contributions; and
(b) in the case of a person who has previously ceased to be a contributor, any amount that, under section 7A of the Act, is to be added to the amount of the person’s accumulated relevant contributions.
Section 7A ensures that, where a contributor’s period of contributory service has not been continuous owing to his having been at same stage an invalidity pensioner or a person to whom deferred benefits were applicable, his accumulated contributions on again ceasing to be a contributor will include the contributions made by him prior to his break in service, together with interest calculated in accordance with the regulations.
Section 145 of the Act provides that, where a contributor was previously a member of a superannuation scheme based on life assurance policies, he may assign them to the Commissioner for Superannuation who will arrange for them to be maintained on behalf of the contributor. In certain circumstances, eg, on the policies maturing while the person is still a contributor or on the contributor attaining his minimum retiring age,
the policies cease to be available to the contributor. In these circumstances, the Commissioner is required, in accordance with sub-sections 145(8) and (9), to pay to the Fund, out of the proceeds of the policies, the amount of the contributor’s share of the surrender value of the policies as at the date of cessation of his membership of the previous scheme together with the amount of any interest that, in accordance with the regulations, is payable in respect of that amount.
BACKGROUND
The Superannuation (Interest) Regulations (Statutory Rules 1978 No 253 as amended by Statutory Rules 1980 No 98 and 1981 Nos 17 and 213) prescribe the rate of interest payable on accumulated basic contributions and accumulated supplementary contributions and interest payable into the Superannuation Fund out of the proceeds on maturity or surrender of life assurance policies for the financial years commencing 1 July 1976, 1 July 1977, 1 July 1978 and 1 July 1979. The Regulations also prescribe the rate of interest to apply from 1 July 1980 in respect of a person who has ceased to be an eligible employee on or after 1 July 1980.
The interest rate included in the new regulations amends the rate currently applying for the period commencing 1 July 1980. This amendment is made in the light of an anticipated significant increase in the earning rate for 1980-81 arising from a review of the accounting policies of the Superannuation Fund Investment Trust. The prescribed rate, which is based on draft financial statements of the Fund for 1980-81, replaces the rate of 9.637% prescribed in Statutory Rule 1981 No 213 of 31 July 1981, and applies until a new earning rate for 1980-81 and an interest rate for the period commencing 1 July 1981 based on final accounts for 1980-81, are prescribed.
CONTENT OF THE REGULATIONS
The regulations contained in the Statutory Rule amend the Superannuation (Interest) Regulations by prescribing the following interest rate for the period shown:
• For the period commencing 1 July 1980: 11.500% pa
The new rate applies to contributors under the Act who -
(a) cease Commonwealth employment on or after the date of gazettal of the regulations; or
(b) cease Commonwealth employment before the date of gazettal of the regulations and the amount or rate of the benefit payable under the Act is determined by the Commissioner for Superannuation on or after that date.